Cyber liability insurance offers businesses financial protection against the high costs of data breaches and malicious cyber-attacks. While having this coverage is becoming increasingly important for businesses, high demand and rising costs have made these policies more difficult to come by.
As experts in cybersecurity in Miami, we recommend that businesses invest in cybersecurity measures to protect against attacks. Insurance is great to have, but having solid cybersecurity protocols in place can help you avoid having to file claims or, worse, losing your coverage.
The Rising Cost of Cyber Liability Insurance
According to the Government Accountability Office, the number of policyholders opting for cyber coverage increased from 26% in 2016 to 47% in 2020. Clearly, insurance clients took the threat of cyberattacks seriously and took steps to mitigate financial risks.
However, during this same period, the costs of cyberattacks nearly doubled. Naturally, insurance premiums increased as well.
Demand for cyber liability insurance continues to rise, but the industry is finding it challenging to provide coverage and price cyber risk. As a result, many insurers have decided to take steps to limit their exposure to cyber-related losses.
The higher cost of coverage is at least partly due to the increased severity, cost and frequency of cyberattacks.
Why It’s Important to Invest in Small Business Cybersecurity
Investing in small business cybersecurity is more important now than ever before. Threats are rising, and we’re seeing this more often as we enhance cybersecurity in Miami. However, there’s another issue occurring at the same time: difficulty obtaining insurance.
Rising costs for cyber liability insurance are making it increasingly difficult for small businesses to:
- Obtain the cyber liability insurance they require
- Pay the cost of the insurance
Additionally, insurers want to know the risk of the business falling victim to a security breach. If small businesses aren’t taking their security seriously, underwriting may not approve a policy and deem that the risks are too high.
We're at a point where cyber coverage rose by nearly double in four years, yet cyberattacks doubled at the same time.
Because the costs of cyber liability coverage are increasing alongside the severity and frequency of attacks, finding a quality insurance policy can be challenging for business owners.
Small business cybersecurity systems must be put in place. When insurance is inadequate or nonexistent, cybersecurity systems can help prevent attacks that can potentially bankrupt a business or tarnish its reputation permanently.
Even when businesses do have cyber liability coverage, it may not be enough to cover the losses sustained in an attack. Insurers have tightened the terms and conditions of their policies, which may make it more difficult to have claims approved. For businesses that don’t implement cybersecurity measures, having inadequate coverage can be disastrous.
As an expert of cybersecurity in Miami, we know the importance of having the right security systems in place. The right system offers an effective way to manage security threats, reduces your risk and also minimizes the need for costly insurance.
Also, if you still want to take out insurance, you can with less risk to the insurer and an easier approval for your business.